Immigration and a Reverse Brain Drain?

By David Butcher

August 27, 2007

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The huge backlog in U.S. immigration visas is leading to a "reverse brain drain" that will force skilled workers to return to their home country and result in a subsequent decline in U.S. competitiveness, a new study shows. Is what's good for business good for America?

The growing backlog in United States immigration visas is leading to a "reverse brain drain" that will force skilled workers to return to their home country, a report released last week concludes. Roughly one in five new legal immigrants and one in three employment-based legal immigrants are planning to leave the United States or are uncertain about the future, according to a joint study by researchers at Duke, Harvard and New York universities.

Every year, about one million scientists, engineers, researchers and other highly skilled immigrant workers compete for 120,000 permanent U.S. resident visas. In April, the U.S. Immigration and Citizenship Service stopped taking applications for fiscal 2008's allotment of H-1B visas a mere one day after filing began, when it was flooded with a reported 130,000-150,000 requests for the 65,000 slots available for H-1B visas; hence outcries for raising the cap.

In the study, sponsored by the Ewing Marion Kauffman Foundation, a Kansas City, Mo.-based entrepreneurship organization, the researchers conclude that the number of skilled workers waiting for visas is significantly larger than the number that can be admitted to the U.S.

This imbalance poses a serious threat to American innovation and competitiveness, researchers say.

 Foreign nationals residing in the U.S. were named as inventors or co-inventors in 25.6 percent of international patent applications filed from the United States in 2006. This represents an increase from 7.6 percent in 1998.

 Foreign nationals contributed to more than half of the international patents filed by a number of large, multi-national companies, including Qualcomm (72 percent), Merck & Co. (65 percent), General Electric (64 percent), Siemens (63 percent) and Cisco (60 percent). Forty-one percent of the patents filed by the U.S. government had foreign nationals as inventors or co-inventors.

 In 2006, 16.8 percent of international patent applications from the U.S. had an inventor or co-inventor with a Chinese-heritage name, representing an increase from 11.2 percent in 1998. The contribution of inventors with Indian-heritage names increased to 13.7 percent from 9.5 percent in the same period.

 The total number of applicants and their family members waiting for permanent residence in the United States in 2006 was estimated at 1,055,084. Additionally, there were some 126,421 residents abroad waiting for visas, making a worldwide total of 1,181,505.

In January, a study based on telephone surveys with 2,054 companies and projections by researchers at both the University of California at Berkeley and Duke found that foreign-born inventors living in the U.S. without citizenship accounted for 24 percent of patent filings last year. Such patent filings were at 7.3 percent in 1998, according to the report, which also looked at founders of engineering and technology companies started from 1995 to 2005 and analyzed the World Intellectual Property Organization Patent Cooperation Treaty database.

The study, which comes nearly eight years after an influential UC-Berkeley report on the impact of foreign-born entrepreneurs, notes that, of an estimated 7,300 U.S. tech startups founded by immigrants, 26 percent have Indian founders, CEOs, presidents or head researchers.

"Given that the U.S. comparative advantage in the global economy is in creating knowledge and applying it to business, it behooves the country to consider how we might adjust policies to reduce the immigrant backlog," Robert Litan, vice president of research and policy at the Kauffman Foundation, said in a statement.

The Kauffman Foundation study is the third in a series of studies focusing on immigrants' contributions to the U.S. economy.

Is what's good for business good for America? Or just another red herring? Weigh in with your thoughts below.

Also, stay tuned for related coverage next week in the next IMT biweekly e-newsletter, covering such topics as the state of labor and productivity, the future of manufacturing and engineering, talent management, switching careers and negotiating pay raises, among other things  essentially, our big Labor Day issue.